Professional Documents
Culture Documents
3; March 2011
Alireza Fazlzadeh
Assistant Professor of Economy & Management Faculty
Tabriz University, Iran
Tel: 98-914-404-2925 E-mail: fazlzadeh_acc@yahoo.com
Kazem Mahboubi
Assistant Professor of Accounting Faculty
Urmia University, Iran
Tel: 98-912-134-2505
Abstract
This study is aimed to determine the role of ownership structure on firm performance. Using panel data
regression analysis method, the role of variables of ownership structure which includes: ownership concentration,
institutional ownership and institutional ownership concentration have been examined for 137 listed firms of
Tehran stock exchange within the period 2001 to 2006. It is concluded that ownership concentration doesn’t have
any significant effect on firm performance but the effect of two other variables are significant: institutional
ownership has positive significant effect on firm performance but the effect of concentrated institutional
ownership is negative. In the next part of this research the effect of ownership structure on firm performance
based on type of the industry has been studied and it is concluded that the industry factor moderates this
effectiveness relationship. The findings of this research shed light on the role of ownership structure plays in
corporate performance and thus offer insights to policy makers interested in improving corporate governance
system.
Keywords: Ownership structure, Ownership concentration, Institutional ownership, Corporate governance, Firm
performance
1. Introduction
The concept of Ownership structure is an important subject within the broad concept of corporate governance. In
fact, Ownership structure is a mechanism of corporate governance. Corporate governance system is considered
as one of the essential factors of growth and development. According to Hasan and Butt (2009), corporate
governance is a philosophy and mechanism that entails processes and structure which facilitate the creation of
shareholder value through management of the corporate affairs in such a way that ensures the protection of
individual and collective interest of all the stakeholders. Sound corporate governance principles are the
foundation upon which the trust of investors and lenders is built. Corporate governance is generally associated
with the existence of agency problem and its root can be traced back to separation of ownership and control of
the firm. Agency problems arise as a result of the relationship between shareholders and managers and are based
on conflicts of interests within the firm. Similarly conflict of interests between controlling shareholders and
minority shareholders is also at the heart of the corporate governance literature. There are great varieties of
different corporate governance system in the world wide. Researches show that there are plenty of factors such
as regulations, ownership structure, cultural and economical environment which are influential to establish
specific kind of corporate governance system in disparate countries. It is proved that the enhancement of
corporate governance system leads to development of capital markets.
What ultimately matters for companies, policy makers and economists alike is whether ownership structure
affects corporate performance, and if so, how. The fundamental insight into the issues dates back to Berle and
Means (1932), who argue that the separation of ownership and control of modern companies naturally reduces
management incentives to maximize corporate efficiency (Hu & Izumida, 2008).
Although the ownership-performance relation has been a hot topic for decades, scholars have not reached an
agreement with it. Generally speaking, theoretical and empirical researches supplement each other. Since the
ownership-performance relation is subject to controversy in theory (as will be studied in theoretical background
part), empirical researches become more important to examine which of the logically possible explanations is the
most probable.
The study of the outcomes of the privatization, demonstrate that dispersed ownership structure leads in
inefficiency of privatized companies in some Asian countries. So it can be concluded that, based on the
environmental conditions, different types of ownership structure may have disparate effect on firm performance.
Since the privatization policies are followed in Iran, the stock exchange market of Tehran provides us with good
opportunity to examine if the mentioned policies have been successful or not. Accompanying with these policies,
many public enterprises have been privatized to a private enterprise which is subject to the influence of the frame
and the management and administration system of the public enterprises. Following these objectives, the
government of Iran has issued Equity Stock. Through this policy the ownership of public enterprises will be
transferred to people. In other word the ownership of firms will be changed from concentrated ownership to
dispersed ownership. As it will be discussed in theoretical background part of this research, considering negative
impacts of dispersed ownership, this policy may have undesired effects on firm performance. Beside the main
object of research, the results of this paper can reveal the accuracy or inaccuracy of this policy.
In this research we will explore the role of ownership structure as an important mechanism of corporate
governance on listed firms of Tehran stock exchange performance.
The remainder of this paper is organized as follows.
x Section 2 provides literature review which includes theoretical background and previous empirical
findings about the subject.
x Section 3 explains the hypotheses.
x Section 4 describes the data, variables and methodology employed during empirical work.
x Section 5 presents and discusses the results of the study
x Section 6 briefly concludes the whole discussion.
2. Literature Review
2.1 Theoretical background
Since the nature of relationship between ownership structure and firm performance is laid on the issue of
corporate governance, the concept of corporate governance is discussed briefly in this part.
The review of literature of issue shows that there is no agreed definition for corporate governance. Generally the
existing definitions of corporate governance are laid on a spectrum which limited and extensive standpoints
could be derived from it (Hassas yeganeh, 2005).
In limited views, corporate governance is considered as relationship between firms and its shareholders. This is
an old pattern which is known as Agency theory (Ibid).
Extensive views describe corporate governance as a vast network of relations not only between firm and its
owners but also the large number of stakeholders like employees, customers, sellers and so on. This standpoint is
known as Stakeholders theory (Ibid).
The OECD provides the most authoritative functional definition of corporate governance:
"Procedures and processes according to which an organization is directed and controlled".
Since the pioneer studies of Berle and Means (1932), the "black box" theory of the firm which considers firm as
a box that transforms inputs to out puts, has come under scrutiny by a growing literature on corporate
governance. Some recent trends in microeconomic theory such as new institutional economics, namely
transaction costs economics, property rights theory, agency theory and so on, have been concerned with the
organizational and financial structure of the firm. Corporate governance has been a much debate topic of
academic research since then (lee, 2008).
The theoretical literature on corporate governance process six main different mechanisms to control the agency
costs:
1. Ownership structure: Jensen and Meckling (1976) and Shleifer and Vishny (1986).
2. Capital structure: Jensen (1986).
3. Board structure: Jensen (1986).
4. Managerial remuneration: Jensen and Mourphy (1990).
5. Product market competition: Hart (1983).
6. Takeover market: Fama and Jensen (1983), Jensen and Warner (1988).
While theoretical analyses of corporate governance deliver counteracting mechanisms of control, the empirical
literature shed light on the role of these counteracting mechanisms, suggesting firm value is an outcome of these
mechanisms (Kumar, 2003).
In the literature, along with agency cost approach, some other mechanisms are also proposed to explain the
relationship between ownership structure and firm performance. In general, agency theory is used to analyze the
relationship between principals and agents but there is an increasing need to understand the conflict between the
different classes of principals as some owners might have different incentives/strategies to monitor (Ibid).
As it is derivable from the literature, there are two main dimensions which are related to the issue of ownership
structure: ownership concentration (i.e. the distribution of shares owned by majority shareholders) and identity
of owners.
Since the contrasts between managers and owners cause agency costs, the agency problem has been the basis of
debates in ownership structure literature.
Dispersed ownership causes an agency problem in corporations because shareholders' incentives and abilities to
monitor management will be weakened. Legally, shareholders own a corporation but they do not feel any sense
of ownership or control over the firm because their stake is small. Moreover, shareholders usually invest in many
firms in order to diversify risk. They invest for a future dividend stream rather than investment in the future of
the firm. In addition, dispersed shareholders do not have enough knowledge and information to make qualified
decisions (lee, 2008).
On the other hand, concentrated ownership is widely acknowledged to provide incentives for large shareholders
to monitor management. As the ownership stake of large block holders increases, the block holders might have
the greater incentives to increase firm performance and to monitor management than do dispersed shareholders
(Ibid).
There are obvious benefits form concentrated ownership but also some counter arguments. First large
shareholders are typically risk-averse. Widely dispersed ownership offers enhanced liquidity of stock and better
risk diversification for investors. Second, enhanced monitoring by concentrated ownership discourage inside
shareholders (i.e. managers or workers) from making costly firm-specific investments. Third, concentrated
ownership could lead to another sort of agency problem: conflict between large shareholders and small
shareholders. Large share holders have incentives to use their controlling position to extract private benefits at
the expenses of minority shareholders (Ibid).
As discussed, beside ownership concentration, ownership identity is also related to the context of the agency
problem. Monitoring is more effective when controlling shareholders have sufficient knowledge and experience
of financial and business matters. Generally, institutional investors are known to have the resource and ability to
properly monitor management decisions. In theory institutional investors can monitor management more
efficiently than dispersed shareholders because of their expertise (Ibid).
2.2 Previous empirical studies
Akimova and Schwodiauer (2004), examined the effect of ownership structure on corporate governance and
performance of privatized enterprises of Ukraine. The data were taken from a survey conducted in 2001 on 202
medium and large firms for the period 1998-2000. In this research ownership structure was measured by the
percentage of shares held by each type of owner and performance was measured by sales per employee.
Regression analysis was used to test the hypothesis that concentrated outside ownership influences performance
positively. The result showed significant ownership effect on performance. Insider ownership was found to have
a significant non-linear effect on performance, positive within a lower range but negative from a threshold close
to majority ownership onwards. In general, Ukrainian outside owners didn’t have a significant effect on
performance.
Jiang (2004), explored the relationship between ownership structure and firm performance in listed companies of
Heilongjiang province. Ownership structure has two implications in this study: structure of ownership and
ownership concentration. Empirical evidence showed that the performance of legal or person enterprises are not
good enough. So it is suggested that ownership diversification of state share should be taken in long run but not
immediately.
Kapopoulos and Lazaretou (2006), tried to investigate whether there is strong evidence to support the notion that
variations across firms in observed ownership structure result in systematic variations in observed firm
performance. They tested this hypothesis by assessing the impact of the structure of ownership on corporate
performance measured by profitability, using data for 175 Greek firms. Empirical findings suggested that a more
concentrated ownership structure positively relates to higher firm profitability.
Sanchez and Garcia (2007), using meta- analysis technique based on 33 studies, found no substantive
relationship between ownership structure and firm performance. The findings showed that governance system,
measurement of performance, and control for endogeneity moderate the effect of ownership on firm
performance.
Kaserer and Moldenhauer (2008), examined the effect of insider ownership on firm performance in their research.
Using pooled data set of 648 German firms observation for the years 2003 and 1998, they found evidence for
positive and significant relationship between corporate performance - as measured by stock price performance,
market to book ratio and return on assets - and insider ownership. In addition, their research showed that outside
block ownership as well as more concentrated insider ownership has a positive impact on corporate performance.
Overall, the results indicated that ownership structure might be an important variable explaining the long term
value creation in the corporate sector.
Using panel data for South Korea in 2000 – 2006, Lee (2008), found that firm financial performance measured
by the accounting rate of return on assets generally improves as ownership concentration increases, but the effect
of foreign ownership and institutional ownership are insignificant. He also found a hump-shaped relationship
between ownership concentration and firm performance, in which firm performance peaks at intermediate levels
of ownership concentration.
Jelinek and Stuerke (2009), examined the nonlinear relation between agency costs and managerial equity
ownership. They used return on assets as a measure of profitability and two financial statement-based agency
cost measures, i.e. asset utilization and an expense ratio, which proxy for management's efficiency in use of
assets and perquisite consumption, respectively. They found that managerial equity ownership is nonlinearly and
positively associated with return on asset and asset utilization, and nonlinearly and negatively associated with the
expense ratio.
Hasan and Butt (2009), discussed the impact of ownership structure and corporate governance on capital
structure of Pakistani listed companies. The study covers the period 2002 to 2005 for 58 non-financial listed
companies from Karachi stock exchange. Results revealed that board size and managerial shareholding is
significantly negatively correlated with debt to equity ratio. Also the results showed that corporate financing
behavior is not found significantly influenced by CEO/chair duality and the presence of non-executive directors
on the board. Finally the findings suggested that corporate governance variables like size and ownership
structure and managerial shareholding play an important role in determination of financial mix of the firms.
Daraghma and Alsinawi (2010), examined the effect of board of directors, management ownership and capital
structure on the financial performance of the corporations listed in Palestine securities exchange. 28 Palestinian
corporations were selected within four years 2005-2008. The results of their study indicated that the chief
executive officer CEO-chairman separation does not have any significant impact while the CEO-chairman
duality has a significant impact on the financial performance. The results also showed that management
ownership has positive effect on the financial performance. It was also concluded that the debt financing has no
influence on the profitability of Palestinian corporations.
Uadiale (2010), explored the impact of board structure on corporate financial performance in Nigeria. This study
employs four board characteristics include board composition, board size, board ownership and CEO duality.
Findings from the study showed that there is a strong positive association between board size and corporate
financial performance. Also it was concluded that there is a positive association between outside directors sitting
on the board and corporate financial performance. However a negative association was observed between
directors’ stockholding and firm financial performance. In addition, the study revealed a negative association
between ROE and CEO duality.
Lin and Wu (2010), investigated the relevance of family ownership in risk taking. Using a sample selected from
listed companies among the financial institutions in Taiwan during 1996-2007, they found that the family
ownership has a significant negative effect on risk taking in the financial industry. Moreover this influence was
non-linear by the range of family ownership. In contrast when securities and the insurance industry were the
major family-controlled shareholders, the increase of its shareholding percentage was unexpected to positively
affect risk taking. These results were consistent with the “convergence-of-interest hypothesis”.
Ibrahim and Abdul Samad (2001), examined the relationship between corporate governance mechanisms and
performance between family and non-family ownership of public-listed firms in Malaysia from 1999 to 2005.
The findings demonstrated that on average, family ownership experiences a higher value than non-family
ownership based on ROE. On the other hand, based on Tobin's Q and ROA, the study showed that firm value is
lower in family than non-family ownership. In addition, the corporate governance mechanisms such as the board
size, independent directors and duality for family and non-family ownership has a strong significant influence on
firm performance.
3. Hypotheses
This study is aimed to determine the role of the variables of ownership structure on firm performance, similar to
Lee's (2008) work; we have used two aspects of ownership structure which include ownership concentration and
ownership identity.
According to agency theory, ownership structure should affect the efficiency of monitoring mechanisms.
Traditionally, the theory holds that concentrated ownership should mitigate the agency problem (lee, 2008).
Based on the traditional agency theory, the study predicts that ownership concentration positively affects firm
performance. The hypotheses are as follow:
H1: Concentrated ownership has significant positive effect on firm performance.
As discussed before, institutional investors also can be effective owners, because they have the resource and
ability to properly monitor management's decisions. It is assumed that firm performance improves as the share of
institutional ownership grows:
H2: Institutional ownership has significant positive effect on firm performance.
However, although institutional owners may improve the performance of the firm because of their expertise in
investment and financial matters, it seems that when they own a large block of share of a company, or in other
word when the concentration of institutional ownership in a firm is high, the managers of these firms are
impressed by large institutional shareholder's power and consequently they would try to gratify their interests.
This may finally have a negative impact on firm performance:
H3: Concentrated institutional ownership has significant negative impact on firm performance.
4. Data description and methodology
4.1 Sample and Variables
The study uses ownership and financial data of the companies listed in Tehran Stock Exchange for six years
(2001: 2006).
Considering the year 2001 as a groundwork year, 371 firms were identified in different industries of Tehran
Stock Exchange. As a next step industries in which the number of firms were more than 5% of total firms in
Tehran Stock Exchange, were chosen as statistical population. These industries include:
1. Chemical and Pharmaceutical, 61 firms, 16% of total firms.
2. Machinery and Equipment, 50 firms, 13% of total firms.
3. Motor vehicles and Auto parts, 48 firms, 13% of total firms.
4. Non-metallic mineral products, 30 firms, 8% of total firms.
5. Food products and Beverages, 26 firms, 7% of total firms.
6. Textile, 25 firms, 7% of total firms.
In order to analyze data, balanced panel data technique has been used in this research. Considering this, in
statistical population, firms which meet mentioned requirement in below, were chosen as statistical sample:
1. They had been actively present during the years 2001 to 2006 in Tehran Stock Exchange.
2. Their financial year ended in 20th of March (which is the end of the year according to solar calendar).
3. They had no change in their main activities and their financial year.
4. Investment and holding firms were eliminated from the statistical sample.
As a result 137 firms were chosen finally as statistical sample of this research.
Three ownership variables have been used in this study: ownership concentration, institutional ownership, and
institutional ownership concentration.
Ownership concentration (CR) presents the percentage of shares held by a controlling shareholder. The
controlling shareholder refers to a group of shareholders who control the company, such as shareholders owning
substantial equity stake in a company, their family members, and affiliated entities (Lee, 2008). In order to
calculate ownership concentration, Herfindahl index has been used in this research. Herfindahl index is defined
as the sum of the squares of the share of each owner. As such, it can range from 0 to 1. The greater number
shows the greater degree of ownership concentration.
Institutional ownership (INS) is measured by the percentage of shares held by institutional investors, such as
banks, insurance companies, pension founds, mutual funds and so on.
Institutional ownership concentration (INSH) introduces the degree of the concentration of shares which belongs
to institutional owners in a firm. In order to calculate the institutional ownership concentration, Herfindahl index
has been used again.
Two variables have been selected as a proxy for firm performance: net income to total assets ratio (NIA) and
ordinary income to total assets ratio (OIA). The two measures of return on assets (ROA) indicate how profitable
a firm is relative to its total assets.
Beside ownership structure, other factors can explain the variation in firm performance. Therefore several
explanatory variables have been used in regression model of research which includes: firm size, leverage,
liquidity, risk, and business cycle.
Natural logarithm of total asset (LNA) is included to control for the firm size. As for leverage, equity to asset
ratio (EAR) is employed to control for capital structure effect. As a proxy for liquidity of the firm, current ratio
(CUR) is employed which shows the firm's financial capacity to meet its short-term financial distress. For firm
risk, the beta (BET) coefficient of capital asset pricing model (CAPM) is used for capturing systematic risk of a
firm's equity. Each firm's inventory to total assets (IVA) ratio is introduced to control for the effect of business
cycle.
Descriptive statistics for variables of total statistical sample and each of industries separately are presented in
tables 1 to 7 in appendix part.
In table 8, the numeral amounts of main variables of research are presented.
Table 9 shows the ranking of the industries based on the average of the main variables of research.
4.2 Empirical Analysis
Data analyzing has been held in two stages in this research. Using panel data technique, first we analyzed data of
total 137 firms. In the next stage we analyzed these data separately for each of 6 industries. "Eviews 6" software
has been used in order for data analyzing.
Multivariable regression analysis on panel data which are employed to test the hypothesis for total 137 firms are
as follow:
(1) NIA= 0+ 1CR+ 2INS+ 3INSH+ 4LNA+ 5EAR+ 6CUR+ 7BET+ 8IVA+
(2) OIA= 0+ 1CR+ 2INS+ 3INSH+ 4LNA+ 5EAR+ 6CUR+ 7BET+ 8IVA+u
Two other regression equations which are employed to test the hypothesis based on the type of the industry, are
as follow:
(3) NIA= 0+ 1CR+ 2INS+ 3INSH+
Jiang, P. (2004). The Relationship between Ownership Structure and Firm Performance: an Empirical Analysis
over Heilongjiang Listed companies. Nature and Science, Vol.2, No.4, 87-91
Kapopoulos, P., & Lazaretou, S. (2006). Corporate Ownership Structure and Firm Performance: Evidence from
Greek Firms. Bank of Greece, Economic Research Department-Special Studies Division, Working Paper No.37
Kaserer, C., & Moldenhauer, B. (2008). Insider Ownership and Corporate Performance: Evidence from Germany.
Review of Managerial Science, Vol. 2, No. 1, 1-35.
Kumar, J. (2003). Does Ownership Structure Influence Firm Value? Evidence from India. EFMA 2004 Basel
Meeting Paper, [Online] Available: http://ssrn.com/abstract=464521 (December 8, 2009)
Lee, S. (2008). Ownership Structure and Financial Performance: Evidence from Panel Data of South Korea.
University of Utah, Department of Economics, Working Paper No.17
Lin, SH. L., & Wu, M. F. (2010). Family Ownership and Risk-Taking: Exploring nonlinear Effects in Financial
Industry. African Journal of Business Management, Vol.4, No.17, 3738-3751
Organization for Economic Co-operation and Development. (n.d.). Glossary of Statistical terms. [Online]
Available: http://stats.oecd.org/glossary/detail.asp?ID=6778 (December 8, 2009)
Sanchez-Ballesta, J., & Garcia-Meca, E. (2007). A Meta analytic Vision of the Effect of Ownership Structure on
Firm Performance. Corporate Governance, Vol. 15, 879-893
Uadiale, O. M. (2010). The Impact of Board Structure on Corporate Financial Performance in Nigeria.
International Journal of Business and Management, Vol.5, No.10, 155-161
Table 1. Descriptive Statistic for Chemical and Pharmaceutical Industry
Variance
Variable Symbol Description Min Max Average of
Averages
Ownership
Ownership Concentration 0.3167 0.3510
CR 0.3328 0.0002
Concentration Calculated by 2002 2005
Herfindahl Index
Total Percent
Institutional Owned by 51.88 60.06
INS 56.11 8.80
Ownership Institutional 2004 2002
Owners
Institutional
Institutional Ownership
0.1914 0.2461
Ownership INSH Concentration 0.2270 0.0003
2004 2002
Concentration Calculated by
Herfindahl Index
Size of the Natural logarithm 25.68 26.62
LNA 26.18 0.13
Firm of total Asset 2001 2006
Equity to Asset 0.28 0.38
Leverage EAR 0.31 0.001
Ratio 2004 2006
1.12 1.60
Liquidity CUR Current Ratio 1.23 0.034
2004 2006
0.0737 2.0506
Risk BET Coefficient 0.7711 0.4566
2003 2006
Business Inventory to 0.22 0.29
IVA 0.24 0.0006
Cycle Asset Ratio 2006 2001
Net Income to 0.16 0.21
NIA 0.18 0.004
Firm Asset Ratio 2005 2001
Performance Ordinary Income 0.18 0.26
OIA 0.22 0.0007
to Asset Ratio 2004 2001
Variance
Variable Symbol Description Min Max Average of
Averages
Ownership
Concentration
Ownership 0.2843 0.3466
CR Calculated by 0.3151 0.0004
Concentration 2003 2001
Herfindahl
Index
Total Percent
Institutional Owned by 51.98 55.81
INS 54.63 2.09
Ownership Institutional 2003 2001
Owners
Institutional
Ownership
Institutional
Concentration .01657 0.2235
Ownership INSH 0.2023 0.0004
Calculated by 2003 2001
Concentration
Herfindahl
Index
Natural
Size of the 25.72 26.90
LNA logarithm of 26.35 0.214
Firm 2001 2006
total Asset
Equity to Asset 0.30 0.39
Leverage EAR 0.34 0.001
Ratio 2004,2005 2006
0.88 1.16
Liquidity CUR Current Ratio 1.00 0.012
2005 2001
-0.07 1.48
Risk BET Coefficient 0.43 0.31
2006 2002
Business Inventory to 0.18 0.22
IVA 0.20 0.0003
Cycle Asset Ratio 2006 2001
Net Income to 0.12 0.23
NIA 0.19 0.002
Asset Ratio 2006 2002,2003
Firm
Ordinary
Performance 0.13 0.25
OIA Income to Asset 0.20 0.003
2006 2001
Ratio
Variance
Variable Symbol Description Min Max Average of
Averages
Ownership
Ownership Concentration 0.3862 0.4949
CR 0.4359 0.002
Concentration Calculated by 2005 2001
Herfindahl Index
Total Percent
Institutional Owned by 52.29 64.20
INS 56.91 28.29
Ownership Institutional 2006 2001
Owners
Institutional
Institutional Ownership
0.2410 0.3642
Ownership INSH Concentration 0.2971 0.0023
2004 2001
Concentration Calculated by
Herfindahl Index
Size of the Natural logarithm 25.10 26.01
LNA 25.58 0.112
Firm of total Asset 2001 2006
Equity to Asset -0.03 0.21
Leverage EAR 0.055 0.013
Ratio 2006 2001
0.91 1.16
Liquidity CUR Current Ratio 1.09 0.008
2006 2001
0.076 0.538
Risk BET Coefficient 0.388 0.039
2004 2001
Business Inventory to 0.20 0.29
IVA 0.24 0.001
Cycle Asset Ratio 2006 2001
Net Income to 0.00 0.08
NIA 0.03 0.0009
Firm Asset Ratio 2006 2001
Performance Ordinary Income 0.05 0.11
OIA 0.08 0.0004
to Asset Ratio 2003 2001
Table 5. Descriptive Statistic for Motor vehicles and Auto parts Industry
Variance
Variable Symbol Description Min Max Average of
Averages
Ownership
Concentration
Ownership 0.3354 0.4428
CR Calculated by 0.3952 0.0023
Concentration 2006 2001
Herfindahl
Index
Total Percent
Institutional Owned by 33.89 39.98
INS 36.23 5.07
Ownership Institutional 2003 2001
Owners
Institutional
Ownership
Institutional
Concentration 0.0967 0.1455
Ownership INSH 0.1184 0.0005
Calculated by 2004 2001
Concentration
Herfindahl
Index
Natural
Size of the 26.66 27.72
LNA logarithm of 27.27 0.18
Firm 2001 2006
total Asset
Equity to Asset 0.25 0.29
Leverage EAR 0.27 0.0003
Ratio 2003,2005 2002,2006
1.01 1.24
Liquidity CUR Current Ratio 1.12 0.007
2005 2001
0.069 2.868
Risk BET Coefficient 0.642 0.469
2006 2003
Business Inventory to 0.28 0.33
IVA 0.305 0.0003
Cycle Asset Ratio 2006 2001
Net Income to 0.08 0.12
NIA 0.105 0.0002
Asset Ratio 2006 2003
Firm
Ordinary
Performance 0.13 0.16
OIA Income to Asset 0.145 0.0001
2006 2003
Ratio
Variance
Variable Symbol Description Min Max Average of
Averages
Ownership
Ownership Concentration 0.4388 0.5163
CR 0.4778 0.0009
Concentration Calculated by 2002 2006
Herfindahl Index
Total Percent
Institutional Owned by 63.54 67.11
INS 65.40 1.61
Ownership Institutional 2002 2003
Owners
Institutional
Institutional Ownership
0.3366 0.4008
Ownership INSH Concentration 0.3699 0.0007
2002 2006
Concentration Calculated by
Herfindahl Index
Size of the Natural logarithm 25.00 25.28
LNA 25.16 0.011
Firm of total Asset 2001 2005
Equity to Asset -3.37 -0.48
Leverage EAR -1.21 0.70
Ratio 2006 2001
0.56 0.89
Liquidity CUR Current Ratio 0.68 0.36
2005 2001
-0.125 0.27
Risk BET Coefficient 0.015 0.018
2001 2004
Business Inventory to 0.30 0.43
IVA 0.36 0.003
Cycle Asset Ratio 2006 2001
Net Income to -0.69 -0.26
NIA -0.41 0.027
Firm Asset Ratio 2006 2003
Performance Ordinary Income -0.50 -0.21
OIA -0.31 0.011
to Asset Ratio 2006 2003
Variance
Variable Symbol Description Min Max Average of
Averages
Ownership
Ownership Concentration 0.3717 0.4082
CR 0.3829 0.0002
Concentration Calculated by 2006 2001
Herfindahl Index
Total Percent
Institutional Owned by 50.28 57.26
INS 53.59 6.77
Ownership Institutional 2004 2001
Owners
Institutional
Institutional Ownership
0.2091 0.2713
Ownership INSH Concentration 0.2404 0.0004
2004 2001
Concentration Calculated by
Herfindahl Index
Size of the Natural logarithm 25.70 26.62
LNA 26.21 0.13
Firm of total Asset 2001 2006
Equity to Asset -0.07 0.22
Leverage EAR 0.09 0.01
Ratio 2006 2001
0.98 1.17
Liquidity CUR Current Ratio 1.07 0.01
2005 2001
0.17 0.66
Risk BET Coefficient 0.47 0.03
2004 2002
Business Inventory to 0.25 0.32
IVA 0.28 0.00
Cycle Asset Ratio 2006 2001
Net Income to 0.03 0.11
NIA 0.07 0.00
Firm Asset Ratio 2006 2001
Performance Ordinary Income 0.08 0.15
OIA 0.11 0.00
to Asset Ratio 2006 2001
Table 10. The Result of "F" Statistic Test for Model (1)
F-statistic Prob (F-statistic)
2.40 0.03
Table 11. Estimating Model (1) Using Fixed Effects Method
Variable Coefficient t-statistic Prob.
NIA 1 …… ……
C -0.285 -2.43 0.015
CR 0.016 0.52 0.602
INS 0.001 3.54 0.000
INSH -0.208 -3.94 0.000
LNA 0.012 2.76 0.006
EAR 0.196 34.23 0.000
CUR 0.084 6.73 0.000
BET 0.017 4.08 0.000
IVA -0.313 -8.17 0.000
Table 12. The Result of "F" Statistic Test for Model (2)
Table 14. The Coefficients of Independent Variables of (3) & (4) Regression Models
Dependent
Industry CR INS INSH
Variable
-0.034 0.002 -0.331
NIA
Chemical and Insignificant Significant Significant
Pharmaceutical 0.004 0.001 -0.270
OIA
Insignificant Significant Significant
0.033 -0.004 0.552
NIA
Food products Insignificant Significant Significant
and Beverages 0.004 -0.003 0.390
OIA
Insignificant Significant Significant
0.109 0.003 -0.357
NIA
Non-metallic Significant Significant Significant
mineral 0.164 0.003 -0.427
OIA
Significant Significant Significant
-0.046 -0.001 0.016
NIA
Motor vehicles Insignificant Insignificant Insignificant
and Auto parts -0.051 -0.001 0.484
OIA
Insignificant Insignificant Insignificant
-0.003 0.002 0.550
NIA
Insignificant Insignificant Insignificant
Textile
-0.017 -0.004 -0.155
OIA
Insignificant Insignificant Insignificant
-0.506 -0.002 0.678
NIA
Machinery and Significant Significant Significant
Equipment -0.319 -0.001 0.414
OIA
Significant Significant Significant
Table 16. The Effect of Explanatory Variables of Regression Models on Firm Performance for Total 137 Sample
Firms
Variable Effect
Ownership Concentration (CR) Insignificant
Institutional Ownership (INS) Significant Positive
Institutional Ownership
Significant Negative
Concentration (INSH)
Size (LNA) Significant Positive
Leverage (EAR) Significant Positive
Liquidity (CUR) Significant Positive
Risk (BET) Significant Positive
Business Cycle (IVA) Significant Negative
Table 17. The Effect of Ownership Structure's Variables on Firm Performance Based on the Type of the Industry
Motor Motor
Food
Total vehicles vehicles
Chemical and Non-metallic products
Variable/Industry 137 and Textile and
Pharmaceutical mineral and
Firms Auto Auto
Beverages
parts parts
No Positive No No Negative
CR No Effect No Effect
Effect Effect Effect Effect Effect